Uncertainty to Opportunity
We’ve all been consumed by the economic and political fallout from the EU referendum. With almost half of Nulty’s London-based lighting designers coming from other EU nations and beyond, we’ve all been trying to grasp what it could mean. For many of us this is not just a shift in a place we call home, but one that may lead to significant changes in our lives. According to a report on Designorate, there are about three million jobs that may be affected due to Brexit and while this whole number may not suffer unemployment, likely changes to visa regulations and immigration laws between countries may impact many existing and future employment opportunities.
But let’s try and clear this one up… the UK design industry isn’t about to suddenly stop hiring people from overseas and evicting the talented, international people who live here and contribute to British society and its industries. That simply won’t (we hope) be the case and diversity will continue the same way it’s always happened – allowing the UK design industry to attract the best talent from all international markets.
Along with ensuring the free movement of talent, we know that the success of our industry depends on bringing about stability, negotiating better trades terms, and prioritising international relations – the list goes on. But what does it mean to the lighting designer in a UK practice? One thing is for certain: the foundations of British design are strong enough to prevail the storm. The creative industries contribute massively to the UK economy and design is the fastest growing sector within the UK according to the Design Business Association & the Design Council’s 2015 report The Design Economy.
This may be bolstered in the short-term as the British pound remains weak; providing increased opportunity to win more overseas projects as suddenly we can offer great British design and expertise at a discount. But what impact does this have on our current UK-based projects? Saving money where possible becomes the priority and one of the first cuts in spending is usually the lighting scheme.
As lighting designers we need to educate and secure our position at the design table more than ever: good lighting is after all a significant part of creating a successful project (in terms of design, atmosphere, energy expenditure and so on). Against a backdrop of cost reduction we need to fight for our designs whilst remaining flexible and proactive in value engineering our specifications where necessary.
There will definitely be more competition between lighting design consultancies to not only win the increasingly limited amount of projects coming in, but also to be more competitive on our fees. This doesn’t seem to be the case for UK-based manufacturers. It’s recently been reported that UK manufacturing had posted its biggest rebound in 25 years (FT, 2016; BBC, 2016 & Telegraph, 2016). It’s possible this news could instil a false sense of security in the manufacturing industry, as all evidence suggests this “improved performance” has not been the result of increased productivity or greater demand for British produced goods, but simply the weaker pound making our products cheaper to the international market. It is important British manufacturers do not become complacent during this period, but take the opportunity to invest and focus on becoming better. Now is the time for the best of British to be undertaking R&D of new products. Doing so will enable them to remain competitive if the pound recovers, as seems likely, in the future. For British industry to make the most of the longer term impact of Brexit, investment, productivity improvements and a reputation for quality will be key.
With announcements by the government that corporation tax will be cut to 15%, this would mean that Britain would have one of the lowest corporation tax rates of any major developed economy (Ireland having the lowest at 12.5%) making it a “super-competitive economy” (Osborne, 2016). This would definitely woo business if such a proposal goes ahead but it’s a double-edged sword. While the UK would benefit from businesses that will find it lucrative to invest in the UK, relations between the EU and the UK will be damaged, which will have a direct impact on the kind of projects we’re invited to tender in the future.
Our consultancy services are just part of the lighting food chain; there’s also the knock-on effect to manufacturers. The possibility of rising material costs following the fall in the value of the pound and/or potential tax increases imposed on UK goods imported from the EU may offset any competitive edge we would have, which is a serious concern. Currently, the UK can export to the EU without paying any tariffs and vice versa. If import tariffs are levied on goods entering the UK, it’s immediately evident what implications will be on many lighting projects; our current specifications are full of European made products (actually most are made in China but that’s a whole other debate).
Such cost increases will inevitably lead to increased prices. However, this could play into the hands of those in the UK lighting manufacturing industry who have been out of the spotlight for a while but offer good products and could, potentially, be more competitively priced.
If corporation tax is cut, UK business may see a considerable rise in the amount of profits, which would make up for any falls caused by the uncertainty following Brexit, which will stimulate the economy. Again, this directly affects the type and volume of projects we do in the future.
Whether or not UK design consultancies will be cut off from access to the EU isn’t too much of a scary thought though. As we’ve all noticed, lighting design consultancies, Nulty included, are now making their mark in the Middle East and it’s not the sun or heat we’re all after. With the huge development and growth happening in markets outside of the EU, UK lighting designers could significantly benefit from new trade agreements, particularly in the Middle East and Asia, who are experiencing rapidly growing construction markets. We’re able to offer world-leading design expertise and it’s the very reason why reputable design consultancies such as ours is adapting and expanding into new markets.
What about standards and regulations? The UK has been a member of the EU for about 40 years and is very much intertwined, having a powerful seat at the EU member’s table and the European Committee for Standardisation (CEN). The UK’s full access to the single market and influence on lighting standards may now be jeopardised as post-Brexit uncertainty continues. In reality, what this means to us designers is that if continued input into standards are not included in the UK’s negotiating platform after Article 50 has been declared, then we will be adhering to standards we have no input in, in order to sell our services/products to the EU. Until Article 50 is issued, we are “business as usual” where EU law continues. The UK has two years to fully conclude its departure from the EU but may I remind you that the process took Greenland four years when they opted to leave, and the main discussions were about fishing rights.
That said, we’re an adaptable and resilient industry and even if the worst happened and we lost our influence over future European standards and norms I’m sure we could still work successfully: we do so with LEED for example – a US document that we as Europeans have no influence over.
So, it’s not all doom and gloom for us in the industry post Brexit. Periods of significant change are rare and this is an amazing opportunity for the UK to establish itself as a continued world leader and independent nation, but we need to do so as an outward looking entity – so that the best international talent is attracted and that our voice is heard as experts.
We most definitely cannot predict the future political climate, but we can ensure that the Nulty team remains intact, reinforcing our brand values, creativity and keep pushing the boundaries of architectural lighting design. No doubt London holds an enviable position in the creative world and the next few years will require great adaptability and resilience from us all.